Macro Test-Chap 1-3

Which of the following shifts the supply curve rightward?

A decrease in the price of the resources used to produce the good.

Which of the following statements about the right to private ownership is false?

It weakens the incentive to maintain the property that one already owns.

Firms are motivated to minimize production costs because

competitive pressures in the market will drive out higher-cost producers.

A market is in equilibrium:

if the amount producers want to sell is equal to the amount consumers want to buy.

Broadly defined, competition involves

independently acting buyers and sellers and freedom to enter or leave markets.

The law of demand states that the quantity of a good demanded varies

inversely with its price.

A supply curve differs from a supply schedule because a supply curve:

is a graph and the supply schedule is a table.

Refer to the diagram. The combination of computers and bicycles shown by point F:

is attainable but implies that the economy is not using all its resources.

A point inside a production possibilities frontier:

is attainable but some resources are wasted

Any production point outside the production possibilities frontier

is unattainable.

The quantity demanded is

the amount of a good that consumers plan to purchase at a particular price.

In the figure are two linear production possibilities curves for countries Alpha and Beta. We can conclude that:

the opportunity cost of shelter is greater in Alpha than it is in Beta.

A supply curve shows the relation between the quantity of a good supplied and

the price of the good. Usually a supply curve has positive slope.

A complement is a good:

used in conjunction with another good.

Economic systems differ according to which two main characteristics?

who owns the factors of production and the methods used to coordinate economic activity

Surpluses drive market prices up; shortages drive them down. True or False.

False

Refer to the diagram. A decrease in demand is depicted by a:

shift from D2 to D1.

Refer to the diagram. If this is a competitive market, price and quantity will move toward:

$40 and 150, respectively.

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities: Refer to the above table. In moving from combination C to B, the opportunity cost of producing 100 more autos is:

1 unit of tanks

Which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity?

An increase in supply.

Which of the diagrams illustrate(s) the effect of a decline in the price of irrigation equipment on the market for corn?

C only

Economic efficiency is the primary guide in answering which of the fundamental questions in a market economy?

How is the output to be produced?

Consumers express self-interest when they:

Seek the lowest price for a product

Refer to the above graph. Which of the following statements about combination G is true?

The nation may not be able to produce combination G, but it can consume that combination if it specializes and trades

Which of the following is NOT held constant while moving along a supply curve?

The price of the good itself.

If a market is NOT in equilibrium, then which of the following is likely to occur?

The price will adjust to bring the market to equilibrium.

The implementation of a price ceiling in a market, typically will create

a shortage

A surplus occurs when the price is:

above the equilibrium price.

Freedom of enterprise

allows businesses, within broad limits, to choose what goods to produce.

Refer to the diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:

an increase in demand has been more than offset by an increase in supply.

The competitive market system

encourages innovation because successful innovators are rewarded with economic profits.

Private property

encourages owners to maintain or improve their property so as to preserve or enhance value.

Which of the following is not a typical characteristic of a market system?

government ownership of most property resources

Inferior goods are those for which demand increases as:

income decreases.

Refer to the diagram, which shows demand and supply conditions in the competitive market for product X. Other things equal, a shift of the supply curve from S0 to S1 might be caused by a(n):

increase in the wage rates paid to laborers employed in the production of X.

(Consider This) Free products offered by firms:

may or may not be free to individuals but are never free to society.

Refer to the diagram. An increase in quantity supplied is depicted by a:

move from point y to point x.

A positive statement is one that is:

objective and is based on facts.

"Macroeconomics is the part of economics concerned with individual units such as a person, a household, a firm, or an industry." This statement is:

positive but incorrect.

A policy of minimum wage is an example of

price floor

Refer to the budget line shown in the diagram. If the consumer's money income is $20, the:

price of C is $4 and the price of D is $2.

A price floor

results in a surplus if the floor price is greater than the equilibrium price.

Assume a drought in the Great Plains reduces the supply of wheat. Noting that wheat is a basic ingredient in the production of bread and potatoes are a consumer substitute for bread, we would expect the price of wheat to:

rise, the supply of bread to decrease, and the demand for potatoes to increase.

The demand for a good increases when the price of a substitute ____ and also increases when the price of a complement ____.

rises;falls

If a producer can use resources to produce either good A or good B, then A and B are:

substitutes in production.

Each point on the demand curve reflects

the highest price consumers are willing and able to pay for that particular unit of a good.

A fall in the price of a good causes producers to reduce the quantity of the good they are willing to produce. This fact illustrates:

the law of supply.

When the quantity demanded equals quantity supplied:

the market is in equilibrium

The production possibilities frontier represents

the maximum levels of production that can be attained.

In a competitive market economy, firms select the least-cost production technique because

to do so will maximize the firms' profits.

Refer to the diagram. The combination of computers and bicycles shown by point G is:

unattainable given currently available resources and technology.